Blue Cross and Blue Shield plans across the country filed federal lawsuits against tobacco companies last week, seeking more than $3 billion in compensation for healthcare costs they contend resulted from illegal activities by cigarette makers.
Thirty-seven plans joined three suits, which were filed in district courts in Chicago, New York and Seattle. Collectively, the plans call themselves the Coalition for Tobacco Responsibility.
The Blues plans contend tobacco companies violated federal antitrust, fraud and racketeering laws by concealing the addictive nature of tobacco, manipulating nicotine levels and targeting teenagers in marketing campaigns.
"For too long, the American people have paid for the tobacco companies' illegal activities," said Michael McGarvey, M.D., chief medical officer of Blue Cross and Blue Shield of New Jersey. "We must hold the tobacco industry accountable for its actions."
MODERN HEALTHCARE disclosed the Blues plans' intent to sue two weeks ago (April 20, p. 4).
Pressured by increasing healthcare costs, Blues plans throughout the country are expected to raise premiums by 5% to 10% this year, according to the national Blues association (Jan. 5, p. 56). McGarvey said it might be justifiable to use any recoveries from the tobacco lawsuits to lower premiums because that could reduce the numbers of uninsured.
But Chris Martin, spokesman for the Blue Cross and Blue Shield Association, said increasing premiums are not a factor in the plans' decision to sue the tobacco companies. There is no assumption the Blues plans will win their lawsuits, and even if they do, it could be years before they see any money, he said.
What's more, Martin said, regulations in some states might require plans to spend a damage award for other purposes, rather than returning it to their bottom lines.
McGarvey added that money is not the chief motive of the Blues plans.
"Our interest is in changing the behavior of the tobacco companies," he said.
The Blues plans' actions come three weeks after the tobacco industry decided to withdraw from negotiations for legislation that would have created a $516 billion national settlement of lawsuits against them.
The Blues coalition also is following the lead of Minnesota Blue Cross and Blue Shield, which along with the state's Medicaid program sued the tobacco companies for $1.8 billion in 1994. That lawsuit has resulted in the release of thousands of pages of secret tobacco company documents.
The coalition was spurred to file its lawsuits because of revelations in those documents about manipulation of nicotine levels and marketing to youth, McGarvey said.
Also in Minnesota, HealthPartners and Medica Health Plans, two hospital-affiliated HMOs, have filed lawsuits against tobacco companies (March 16, p. 10).